Chile: Review Under the Flexible Credit Line Arrangement-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Chile

International Monetary Fund

No 2023/311, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper highlights Chile’s Review under the Flexible Credit Line (FCL) Arrangement. Chile continues to qualify for the FCL by virtue of its very strong economic fundamentals and institutional policy frameworks, and sustained record of accomplishment of very strong macroeconomic policies. In view of the still elevated external risks, the authorities have expressed a desire to maintain the current level of access and are committed to gradually exit the arrangement conditional on the evolution of external risks. The authorities intend to continue to treat the arrangement as precautionary. External downside risks remain tied to a possible abrupt global slowdown and sharply tighter global financial conditions. Domestic risks relate particularly to potential discontent from unmet social demands and deterioration in security as well as uncertainty related to the health care sector. The FCL has provided a valuable buffer against tail risks and boosted market confidence by reinforcing Chile’s policy and institutional strengths.

Keywords: FCL arrangement; Chilean peso; rate reduction; inflation expectation; income tax reform; FCL qualification criteria; Inflation; Fiscal stance; Metal prices; Global; Caribbean (search for similar items in EconPapers)
Pages: 44
Date: 2023-08-25
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